On February 24, 2025, Raydium’s native token, RAY, took a sharp fall, losing 25% to $3.22. This sudden drop came on the heels of rumors that Pump.fun, a leading Solana-based memecoin launchpad, is working on its own automated market maker (AMM) feature. Such an initiative would directly challenge Raydium’s role in the decentralized exchange (DEX) space on the Solana blockchain.
The rumor stemmed from the X (formerly Twitter) handle “trenchdiver,” who posted observations of Pump.fun’s beta testing of AMM liquidity pools. Such pools would allow users to directly trade cryptocurrencies for liquidity in smart contracts, thereby potentially cutting the need for currently available platforms like Raydium. One point of interest was the sighting of a beta interface with Pump.fun’s branding, indicating that the project is deep in testing.
As of now, Pump.fun partners with Raydium through the issuing of tokens which, when gaining enough trading activity, switch into Raydium’s trading pools—referred to as the “bonding curve.” It has been an equal win situation so far, with Raydium taking a 0.25% charge for swaps and earning substantial amounts from the trades in Pump.fun’s tokens. With the emergence of Pump.fun’s own AMM, that situation may come under threat, though. By holding tokens in its own ecosystem, Pump.fun could keep more fees and provide better rewards to its users, potentially siphoning liquidity and trading volume from Raydium.
Fueling the speculation further, February 20 on-chain data confirmed that Pump.fun introduced its first test token, Snowfall (CRACK), into its AMM liquidity pool. The token was subject to wild price action, with its market cap spiking to $5.4 million in a single hour from the time the news broke, only to subsequently drop by as much as 40% to about $1.8 million. Such price volatility highlights the speculative character of these events and their immediate effect on market dynamics.
To date, neither Pump.fun nor Raydium has made any official statements regarding these rumors. The lack of official statements puts the community and investors in limbo, wondering about the possible implications of Pump.fun’s potential transition to an independent AMM system. This transition would have a profound impact on the dynamics of liquidity provision and trading on the Solana network, disrupting traditional platforms and redefining user engagement strategies.
In short, the recent drop in RAY’s value serves to underscore the market’s sensitivity to rumors and the possibility of dramatic changes in the DeFi space. Investors are encouraged to watch official sources for news and exercise caution in making trading decisions, given the fast-changing nature of events.
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